Udaan to raise $1-1.5 bn, eyes $5 bn valuation
MUMBAI: India’s largest commercial online marketplace Udaan is planning to raise $1-1.5 billion from a group of marquee international investors in the next few weeks to fund a massive expansion strategy that the startup has drawn two weeks back, two people aware of the development confirmed this to Mint on the condition of anonymity.
“Udaan’s valuation will become $4.5-5 billion with this fund raise. There is an unprecedented demand from investors especially because retailers too are quickly migrating to e-commerce platforms for their stock and new businessmen are entering pharmaceutical and daily use household items,” said the first person.
This will be the largest fundraise by the five-year young startup Udaan, which is a popular name among lakhs of small retailers and wholesalers in the business-to-business space in the country.
“Goldman Sachs has been appointed by Udaan for the proposed fund raising,” said the second person.
According to the two people, Udaan, which already has a tie up with over 30 lakh retailers and 25,000 sellers, aspires to “double its sales volume within a year” by tying up with more sellers, expanding its logistics network and employing heavier technology, especially with a focus to grow its business in the pharmaceutical and FMCG space that has seen a rapid increase in demand in the backdrop of Covid-19 pandemic.
Despite the pandemic, rapid digitization of the retail and wholesale supply chains is likely to outlast the crisis and trigger faster expansion of both customer and business centric e-commerce platforms. Udaan connects brands and manufacturers with small retailers across food, non-food (electronics and fashion) and pharmaceuticals categories.
Udaan also provides credit to merchants on its platforms and others through a dedicated lending platform and partnership with banks.
Lending is also a major opportunity that the startup plans to build upon.
“Goldman Sachs is talking to a large number of investors. There is immense interest from investors. In the commercial segment, e-commerce penetration is just 1%. The potential is huge. So the valuation has to be higher than the current level and accordingly the quantum of the stake sale by Udaan will be decided,” said the first person.
Online B2B platforms have witnessed rapid growth in recent years but still form a minuscule part of the market.